Green hits the mark

7 July 2004 By Hugo Dixon Follow @hugodixon

The board cannot reject the 400p a share offer out of hand not least since it is acceptable to Brandes, its largest shareholder. There are some queries about Green’s financing. But M&S will only be able to see him off if it comes up with a compelling defence on Monday.

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Philip Green has upped his proposed offer for Marks & Spencer to 400p a share in cash, valuing the retailer at £11bn including net debt of £2bn. The retail billionaire is also prepared to offer a cash and share alternative comprising of 335p of cash and a 30% stake in a new, leveraged M&S.

Green says that Brandes, which owns almost 12% of M&S, has undertaken to accept a 400p a share offer if it is made, providing it is recommended by the retailer's board.

Green making a firm offer for M&S is conditional the offer being recommended and of him being allowed to carry out satisfactory due diligence. The RNS statement contains no details about how Green would finance his offer, although he is confident he can raise the money, according to a person familiar with the situation.

Green had made a previous proposal in midJune, for no less than 370p a share, which was rejected by the board. Green had proposed to finance the £10.4bn bid with £7.9bn of debt and £2.5bn of equity. £1.1bn of that would come from Green and his family, and £1.4bn would be put in by HBOS, Goldman Sachs and Barclays Capital.

Green had also made another proposal at the beginning of June, which had also been rejected by M&S. Then, the entrepreneur had offered 290310p a share of cash and a 25% stake of the equity in the new, leveraged M&S.

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